Judge Refuses to ‘Rubber Stamp’ Sprint Deal

MANHATTAN (CN) – Refusing to be a “rubber stamp,” a federal judge scathed regulators Tuesday in a two-page tongue-lashing that demands an explanation as to how consumers will benefit from their deal with Sprint. The Consumer Financial Protection Bureau sued Sprint late last year based on claims that third parties received “virtually unfettered access” to wireless customers’ accounts for a decade in a practice known as “cramming.” Sprint customers lost millions of dollars from third-party charges between 2004 and December 2013, regulators said. “Sprint continued to operate its flawed system despite numerous red flags, such as high refund rates and complaints from customers, law-enforcement agencies, and consumer groups,” the bureau’s 12-page complaint alleged. A settlement ensued, but U.S. District Judge William Pauley III said the bureau provided precious little information on the deal. “This court’s duty extends beyond that of a ‘rubber stamp,'” Pauley wrote in a short but acidic order. In S.E.C. v. Citigroup , Pauley noted, the 2nd Circuit found that merely signing the deals regulators strike with defendants amounts to a “dereliction of the court’s duty to ensure that the orders that it enters are proper.” “If the bureau wishes to invoke federal subject matter jurisdiction, it must be willing to explain why the proposed settlement is fair, reasonable, and consistent with the public interest,” Pauley added. “How the bureau believes a judge can evaluate the proposed settlement with a one sentence joint motion, no memorandum of law, and no declarations, eludes this court. It is especially ironic, given the bureau’s core mission as described on its website to ‘give consumers the information they need to understand the terms of their agreements.'” The bureau declined a request for comment. Pauley citied “the public importance of this case,” saying “there is a need for consumers, Sprint shareholders, and this court, to get ‘the information they need to understand the terms of [this] agreement.'” (Brackets in original) The parties must submit written arguments on their positions. A Sprint spokeswoman said the company is reviewing Judge Pauley’s order, “and we will go through the necessary steps to address this matter with the court.”